Fracking's place in Colorado's urban-rural divide

President Barack Obama has promised to make economic inequality the central issue in congressional elections this year. Similarly, urban-centric activists in Colorado have launched campaigns around economic inequality, such as higher wages for fast food workers. Much of the debate focuses on claims of private market failures as the major source of financial inequality in the United States.

As state and federal policies and regulations are increasingly dominated by urban elites, rural economies and standards of living are increasingly being threatened and undermined.

For example, Weld County has pursued a pro-growth strategy with minimum regulation and low taxes, designed to promote business investment and jobs. During the past decade, Weld has experienced rapid growth in jobs and production, with many people moving in.

In contrast, urban Front Range counties have pursued so-called “smart growth” policies designed to limit economic and population growth. During the past decade, 19,000 residents have left Boulder County, roughly twice the number of people moving in. Boulder now relies on 70,000 employees who commute into the county to work, roughly the same number of employees who also live in the county.

According to census data, Boulder County enjoys a median household income of a little more than $67,000, well above Weld County’s (still healthy) median of $56,500. Yet Boulder County’s median owner-occupied housing cost of more than $350,000 is wildly out of proportion to Weld County’s more modest and affordable $192,000.

The census data also shows the largest municipalities in both Boulder and Weld counties (the city of Boulder and Greeley, respectively) to have roughly the same population at about 100,000. While the city of Boulder’s median household income of a little more than $56,000 is higher than Greeley’s $44,000, Boulder’s housing costs are prohibitively high, with a median owner-occupied price of just under $490,000, compared to Greeley’s roughly $166,000.

In other words, urban “smart growth” policies have essentially turned Boulder into a wealthy enclave, with disenfranchised workers, similar to many ski towns. But Boulder’s middle class is not disappearing. Instead, it has been displaced to Weld and other rural counties with lower costs of living.

The urban-rural conflict has been heightened over the issue of hydraulic fracturing, or “fracking.” In the last election, four Front Range cities voted to ban fracking: Boulder, Broomfield, Loveland and Fort Collins. Anti-fracking proponents promise to take their campaign statewide.

Anti-fracking bans have been enacted in 400 cities around the country.

Anti-fracking forces (or “fractivists”) are lobbying hard in Colorado to have severe limitations and punitive regulations placed on fracking by the urban Democrat-controlled Colorado Legislature, and are quite open about their desire for a ballot measure to outright ban fracking in Colorado.

The battle also is being waged at the federal level. Republicans have introduced separate legislation in both houses of Congress that would limit or prohibit federal reach in states that already regulate fracking. President Obama has promised to veto one of the pieces of legislation: H.R. 2728.

It is easy to understand why Weld stands at the center of Colorado’s fracking battle. Weld is the state’s largest producer of oil and gas, with more than 21,000 wells (more than a third of the state’s total) producing more than 10 million barrels of oil annually. Oil and gas development accounts for a significant amount of county’s revenues, jobs and economic growth.

But being anti-fracking is basically the same as being anti-jobs or anti-growth. Or, put another way, being a “fractivist” is essentially the same thing as being in favor of yet more economic inequality.

If anti-fracking groups successfully push a statewide ban, it would wipe out a major source of investment, growth and jobs in rural Colorado counties while significantly raising the cost of power for low-income city-dwellers already struggling with the high cost of living driven by urban “smart growth” policies.

State and federal regulations that limit hydraulic fracking will only deteriorate hard-won incomes and standards of living throughout rural Colorado, exacerbating the economic inequality the president and urban elites claim to be so concerned about.

Barry Poulson is a retired University of Colorado economics professor and senior fellow in fiscal policy at the Independence Institute, a free market think tank in Denver.